April 2011

The FCC's trillion-dollar gambit

[Commentary] Soon smartphones, tablets and as-yet barely imagined gadgets will be ubiquitous — opening the door to a wireless future in which everything from professional sports to MRI scans will be available on demand anytime, anywhere. Or maybe not. Much depends on the current struggle between the Federal Communications Commission and the broadcast TV lobby.

Any coming wireless revolution depends on a huge expansion of transmission capacity — to support 4G wireless broadband service. While technology and oodles of cash make it possible to cram more data through the existing wireless telecom system, avoiding hopeless traffic jams means access to a lot more of what used to be called the “airwaves.” That’s why FCC Chairman Julius Genachowski made a smart move when he called for repurposing a broad swath of prime, underutilized spectrum now controlled by local TV stations. The big question is whether the broadcasters have the will and political clout to stop him. Genachowski’s approach is pragmatic. He would leave the broadcasters with enough spectrum to maintain over-the-air service, thereby finessing the populist argument that he was killing free TV. To mollify the broadcasters — who, after all, appropriated the spectrum from the taxpayers fair-and-square — he could share some of the auction proceeds with them. The Genachowski solution, however, sure beats the alternative: Waiting until the political cost of denying 4G service to the multitudes is higher than the cost of standing up to the broadcasting lobby. If and when a deal is reached, there’s going to be a lot of second-guessing about how much money is diverted from the Treasury to the broadcasters’ bank accounts. But it’s important to remember that the prize isn't just the tens of billions that the spectrum would likely fetch at auction. It’s the value-added from 4G service that consumers and telecoms can share – a figure that could approach $1 trillion!

[Robert Hahn is director of economics at the Smith School, Oxford, and a senior fellow at the Georgetown Center for Business and Public Policy. Peter Passell is a senior fellow at the Milken Institute]

CBS Plans To Keep Spectrum

CBS has taken a slightly less adversarial tone toward the Federal Communications Commission's spectrum reclamation plan than the National Association of Broadcasters, group owners representing hundreds of TV stations, and state broadcast associations. And since it says it is not going to be selling out its spectrum, or planning to share it with other stations, CBS put an emphasis on the FCC making sure those left behind are still in control of their own destiny.

In comments on the FCC's proposals on channel-sharing, spectrum "repacking" and improving VHF transmissions, CBS said it "appreciated" FCC Chairman Julius Genachowski adopting the proceeding and "for placing spectrum issues front and center on the national agenda by producing the National Broadband Plan." But it did make clear that it was planning to continue in the broadcasting business at least the same level of service and would not be giving up any spectrum for auction. CBS echoed other broadcasters' demands that the reclamation/spectrum auction proposal be "truly voluntary." CBS said that any "repacking" from the UHF to VHF band must be voluntary -- FCC Chairman Julius Genachowski has pledged that would be the case -- but did not oppose general repacking -- moving stations to new spectrum to free up larger contiguous blocks for wireless broadband -- so long as the FCC "provide[s] each broadcaster with a replicated coverage area, in terms of both geography and population; any costs of moving are paid for by the auction proceeds; and the FCC engages in an educational campaign along with broadcasters to ensure that American viewers know where to find their relocated TV station."

Is AT&T a wireless spectrum hog?

AT&T is pinning its future on getting its hands on more wireless spectrum. But should regulators allow AT&T, which owns more wireless spectrum than any other wireless operator across the nation, to gobble up even more of this scarce resource? That's the big question that the Federal Communications Commission is grappling with as it scrutinizes the planned merger between AT&T and T-Mobile, which will transfer all of T-Mobile's spectrum to AT&T. The FCC is also in the middle of considering AT&T's plan to buy spectrum in the lower part of the 700MHz band of spectrum from Qualcomm.

Wireless spectrum is like valuable real estate, and what's going on right now in the wireless market is akin to a good old fashioned land grab. The last major wireless auction for the 700MHz band of spectrum, which was considered beachfront property, was only a few years ago. Unfortunately, for wireless operators all the good "property" has already been bought. And until the FCC can free up more spectrum for auction, the only way for operators to get their hands on new spectrum is to buy it.

In the top 21 markets in the U.S., AT&T has about 284 MHz more spectrum than its closest competitor, Verizon Wireless, according to data provided by Verizon. To put this in context, the FCC's National Broadband Report calls for an additional 500 MHz of spectrum to be made available for auction in the next decade to fulfill the needs of all wireless broadband providers. The FCC has proposed TV broadcasters to give up about 120 MHz in incentive auctions for wireless broadband within the next five years. And AT&T hasn't even touched about 832 MHz of new wireless spectrum in the top 21 markets. This spectrum, which sits in the AWS and 700MHz bands, will be used to build AT&T's 4G LTE network. The company is building the network and has plans to launch it commercially this summer with a target of reaching 70 million to 75 million potential subscribers by the end of this year. Verizon Wireless, which is also building a 4G LTE network using the AWS and 700 MHz spectrum, has about 918 MHz of this spectrum in the top 21 markets. Verizon launched its 4G wireless service in December, and it expects to serve 200 million people with the service this year. And by the end of 2013 it will be available to more than 285 million potential customers.
The 700MHz spectrum that AT&T and Verizon Wireless are using to build their LTE networks was the last bit of spectrum to become available. It had originally been allocated as analog TV spectrum. It was given back to the government after TV broadcasters were forced to start transmitting signals digitally to make their spectrum use more efficient. It's considered prime real estate in terms of wireless spectrum because the low frequency means that it can send data longer distances and penetrate buildings more easily than spectrum at higher frequencies.

AT&T and Verizon currently own more than 90 percent of the licenses for this spectrum in major cities throughout the U.S. And AT&T is hoping to add to its 700MHz coffers by buying an additional 12 MHz of 700 MHz spectrum that Qualcomm is selling.

April 23-29: News of the Wedding

No, not that wedding. The merger we telecommunications wonks care about will join the houses of AT&T and Deutsche Telekom AG/T-Mobile.

On April 21, the bride and groom filed applications seeking the Federal Communications Commission’s consent to the transfer of control of the licenses and authorizations held by T-Mobile USA and its wholly-owned and controlled subsidiaries from Deutsche Telekom to AT&T. Since then there's been lots of analysis of the deal as well as some procedural maneuvers. The Benton Foundation has set up an online home to track the regulatory review of the deal. There you'll find a brief description of the deal as described by AT&T, links to events where the deal will be considered (see, for example, an upcoming Senate hearing), important dates in the review, and links to the many, many Headlines about the deal we've summarized since it was announced. This page will be constantly updated over the next year or so, so come back often.

Speaker Boehner, Rep Cantor want House to use open data formats

House Speaker John Boehner (R-OH) and Majority Leader Eric Cantor (R-VA) wrote to the clerk of the House calling for the chamber's legislative data to be made available in machine-readable formats such as XML. "We believe that this legislative data, using standardized machine-readable formats, should be publicly available on House websites," the pair wrote to House Clerk Karen Haas. "Ultimately, legislative data is the property of the American public. It is our hope that these reforms will continue to rebuild the trust between Congress and the people we serve." The shift toward standardized, machine-readable data formats has been under way within the government for a few years now, but progress has been slow.

Don't Take License Renewal Lightly

[Commentary] Renewals are already underway for radio stations and the license renewal process for television stations will begin next April for TV stations in the Washington, Maryland, Virginia and West Virginia markets. The three-year renewal period will end in 2015, with license renewals for stations in Delaware and Pennsylvania. Given the jam-packed agenda for handling day-to-day challenges, one-to-three years from today may seem a long way off. But longtime broadcast and telecom attorney Lee Shubert, principal of the media and entertainment law firm Sciarrino & Shubert PLLC, says licensees should begin to prepare now for the renewal process. The renewal process can be “deceptively treacherous.” This is largely because the bulk of FCC Form 303-S, the Application for Renewal of a Broadcast Station License “consists of a series of certifications that represent a quagmire of potential liability.” With the FCC’s spectrum purchasing plans coinciding with the license renewal window, there are even more reasons to ensure you’re fully prepared for your station’s license renewal. Given the history of special interest group involvement in the renewal process, this seems like a situation where foxes could be the ones guarding the chicken coop, or be the ones invited to enter it, or both. [Collins is president & CEO of the Media Financial Management Association and its BCCA subsidiary.]

Should Microsoft be a TV Bands Device Database Administrator?

On April 18, 2011, Microsoft filed a proposal with the Federal Communications Commission's Office of Engineering and Technology (OET) seeking designation as a TV bands device database administrator under Part 15 of the FCC's rules. The FCC is now inviting interested parties to file comments on Microsoft's proposal. Comment are due May 20, 2011; Reply comments are due May 31, 2011.

FBI investigating PlayStation hack; Sony looking into compensating users

Sony has released a second Q&A detailing how the PlayStation Network outage will affect game content.

While no specific details have been announced, Sony says it's looking into ways to compensate users of subscription-based games and services like streaming service Qriocity. The gist of the answers relayed by senior director of corporate communications Patrick Seybold is that your game data is just fine. Things like download history, friends lists, and game settings will be unaffected, and any Trophies earned offline will be re-synced once the PSN is back up and running. Users of the Playstation Plus subscription service will be able to access their cloud-based save data once the network is restored. Seybold also addressed the issue of subscription-based MMOs DC Universe Online and Free Realms, and though no specific details have been revealed, developer Sony Online Entertainment is looking into potential ways to compensate players for the downtime.

Also, the Federal Bureau of Investigation is involved in the investigation into the hack. "The FBI is aware of the reports concerning the alleged intrusion into the Sony online game server and we have been in contact with Sony concerning this matter," said special agent Darrell Foxworth. "We are presently reviewing the available information in an effort to determine the facts and circumstances concerning this alleged criminal activity."

AT&T And One Economy Team Up At Broadband Properties Summit

One Economy CEO, Kelley Dunne, and representatives from AT&T delivered a joint keynote address at the Broadband Properties Summit, touting the power of broadband to facilitate the innovation economy and empower minority populations.

“I believe [broadband] is changing the way we live, work, and play,” said Bob Bickerstaff, vice president of consumer data products at AT&T. Bickerstaff noted the growth of broadband adoption to its current rate of approximately 70 percent by those with access to it. He projected an adoption rate of 80 percent in ten years, driven by its integration into everyday life. The new generation of connected devices, he said, currently numbers approximately 7 million, including smartphones, tablets and e-readers. Dunne’s portion of the address emphasized the need to make broadband available to low-income and minority populations, calling it “the fourth utility.” He began his speech with an anecdote about the pervasiveness of broadband by pointing out that Wi-Fi was available on his flight to Dallas. “I Thought, ‘if we can get passengers on a plane online, we can certainly get low-income Americans online,’” Dunne.

Usage Caps Will Now Apply To 56% Of Broadband Users

With AT&T set to implement usage caps and overage charges for all high-speed Internet customers on May 2, more than 42 million broadband subscribers in the U.S. will be subject to explicit pre-set limits on how much bandwidth they can use on a monthly basis. All told, approximately 56% of the country's 75 million broadband subscribers will have some form of caps, according to a Multichannel News analysis based on Leichtman Research Group's subscriber estimates for the fourth quarter of 2010.

Other major U.S. broadband providers that already have usage ceilings in place include Comcast, Cox Communications and Charter Communications. AT&T will be the largest U.S. broadband provider that will not just impose specific usage limits on subscribers but also tack on fees if those caps are exceeded. The telco will limit U-verse Internet subscribers to 250 Gigabytes of total usage (downloads and uploads) and 150 GB on traditional DSL subscribers. For every 50 GB beyond those, customers will be charged $10 (equivalent to 20 cents per GB). According to AT&T, less than 2% of its entire base of digital subscriber line customers will hit the caps, but the change has been criticized by public-interest groups as anti-consumer measure that will inhibit online video services.

Benton

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